CONDO CONVERSATIONS

Condo board, city rules may impact your Airbnb plan

JENNIFER IRELAND

Short-term rental services, such as Airbnb, Home-Away and VRBO, have become a controversial hot topic in communities, especially in condominiums. Many owners want to rent their homes and earn a profit, but they must first consult their governing documents as well as city ordinances.

Owners often believe rentals in their community hurt their home values, but some may argue that a home that is used for short-term rental is likely to be kept in good condition. Much like a hotel or resort, what a renter thinks of the home could hurt the owner. The owner will want exceptional online reviews and therefore are more likely to maintain their home.

But for many homeowners, short-term rentals mean strangers in their communities, loud parties, crowded areas such as pools and gyms, and possible damage to common areas and homes.

How can association boards handle short-term rentals in their communities? There is no one-size-fits-all remedy. The first step is to refer to the community’s governing documents, commonly called Covenants, Conditions and Restrictions, or bylaws. They may prohibit short-term rentals entirely or impose restrictions on them. CC&Rs are enforced by the homeowners’ association, which may or may not impose fines on violators or liens on the property.

The limits for rental agreements and leases are important items to look for when reading over the CC&Rs. It is not uncommon for many communities to prohibit rental leases for less than 30 days, or even for one year.

The CC&Rs may not prohibit short-term rentals but may have restrictions in place regarding rental properties. This may include terms of the lease, nuisance restrictions and restrictions on guests and occupancy in a unit. Terms of the lease can range from minimum/ maximum length of leases, limits of occupancy, repairs and maintenance, pets and illegal activities. These terms can protect not only the homeowner/landlord, but also the community and its members.

Restrictions on guests and occupancy can limit the number of residents and their guests in a unit.

There may be limits to ages that can occupy a home, especially in active-adult communities. In many condo communities there are parking restrictions. More occupants and their guests mean more parking spaces needed.

Whether a home is occupied by owner or tenant, the homeowner is legally responsible for the activities that occur on their property. This may include minor disturbances, such as noise or parking violations, to more major issues, such as damage to home or community from fire or neglect, or illegal activities that can result in legal or financial ramifications.

If the CC&Rs lack this provision to prohibit or restrict short term rentals, steps can be taken to revise it. A board can amend the CC&Rs. It will need the approval of the homeowners, so determining whether they approve or support an amendment is important.

It is advised to work with an attorney specializing in condominium and/or homeowners association real estate law to draft the amendment that meets the needs of both the association and its members and is enforceable under state law. An attorney can also help the association to avoid complications or potential legal actions taken by homeowners who have purchased properties in the community with the intent of earning rental income.

It is important to know and understand the city regulations for short-term rentals.

Some restrictions have already been placed locally on communities. Norfolk City Council approved new regulations to those listing their home on Airbnb that became effective Jan. 1. Homeowners have two options. They can register with the city or go through city council for a conditional use permit. In both instances, owners will need to get a business license and pay the same occupancy tax as hotels do.

Virginia Beach City Council approved an ordinance regulating short-term rentals that takes effect on Nov. 1. Like Norfolk, owners will need to either stay at the home during the guest’s stay or get a conditional use permit if they do not.

Rentals that have paid the transient occupancy tax and have registered with the commissioner of the revenue by July 1, 2018, are grandfathered in, and therefore do not need to get permits. Also, Sandbridge properties do not have to go through this process.

Unlike Norfolk, they have listed additional restrictions. Overnight stays are limited to three people per bedroom. One off-street parking spot is required per bedroom. Owners can only rent to two different people within seven days. Special events permits are required for more than 50 guests, and a property can only have three per year. Structures such as carriage houses or garages with apartments in them cannot be rented.

In addition, they must carry $1 million in liability insurance coverage. All permits must be renewed every five years. Extensions will be granted if no violations have occurred during that period.

Whether an association decides that short-term rentals are accepted or not, they will need to be concerned with the needs of their members and how it will affect their enjoyment of their home and their community.

Jennifer Ireland is a Realtor with Berkshire Hathaway HomeServices Towne Realty and co-chair of the Hampton Roads Realtors Association’s Common Interest Community Forum. Have a question about a condo or common interest community topic? Email svegh@hrra.com. For more on HRRA, go to www.hrra.com, or call 757-473-9700. This column not legal advice nor a legal recommendation.

There is no one-size-fits-all approach. A community’s governing documents, commonly called Covenants, Conditions and Restrictions, or bylaws may prohibit short-term rentals entirely or impose restrictions on them.